The case for CSR/ Sustainability Reporting Done Responsibly


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Case study: How PTT promotes sustainability across its supply chain

PTT Public Company Limited (PTT) is a national energy company established to ensure national energy security for Thailand. PTT manages its supply chain sustainably through the PTT Group sustainable procurement and supplier management policies, which take into account business risks and opportunities with suppliers and encompass environmental, social, and governance issues.

This case study is based on the 2019 Corporate Sustainability Report by PTT published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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PTT focuses on effective supply chain management so as to prevent and mitigate supplier environmental, social, and governance risks  Tweet This!, which may affect stakeholders’ trust in PTT’s business operations. In order to promote sustainability across its supply chain PTT took action to:

  • implement a Code of Conduct
  • audit and assess suppliers
  • implement a SSHE management system for suppliers and contractors

What are the material issues the company has identified?

In its 2019 Corporate Sustainability Report PTT identified a range of material issues, such as

sustainable governance, climate change, human capital development, product stewardship, research, development and innovation. Among these, promoting sustainability across its supply chain stands out as a key material issue for MPC.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups PTT engages with:

To identify and prioritise material topics PTT engaged with its stakeholders through the following channels:

Stakeholder Group                Method of engagement
Country ·      Consultation with public sector monthly

·      Site visit of PTT’s operational sites monthly

·      Seminar and workshops to enhance understanding with public sector quarterly

Community and Society

 

·      Community development activities in ‘People’ and ‘Planet’ dimensions

·      Promotion of social and social enterprises projects in 3 aspects, comprising learning centre development, local product support, and energy development for community

·      PTT Contact Centre 1365, PTT Website or email

Shareholders

 

 

·      PTT website under “Investor Relations” or email

·      PTT Debenture application for bond holders to review their own bond details, activity registration, points collection for special awards

·      Monthly activity for bond holders, such as PTT Group’s site visit and seminars on economic topics

·      Annual general meeting

·      International roadshow to meet and advise non-Thai investors

Customers ·      Annual customer seminar

·      Sales’ and executives’ regular client meeting according to stipulated plan

·      PTT Contact Centre 1365

Suppliers ·      Annual customer seminar

·      Grievance on corruption through email

Employees

 

·      Acknowledgement of employees’ feedback to develop response plan for employees’ needs, and key competencies to accommodate new businesses throughout the year

·      Business relation committee on a monthly basis

·      CEO, Managing Director and high-level executives meet with all employee levels according to plan

What actions were taken by PTT to promote sustainability across its supply chain

In its 2019 Corporate Sustainability Report PTT reports that it took the following actions for promoting sustainability across its supply chain:

  • Implementing a Code of Conduct
  • PTT has established a Supplier Sustainable Code of Conduct, covering direction and scope consistent with relevant regulations and requirements. It encompasses a Code of Business Ethics, social responsibility, occupational health and safety, and environmental management. The document is available in both Thai and English. It is applicable to all suppliers whose contract is at least 2 million baht, and/or those whose operations may potentially impact safety and the environment. This includes suppliers interested in registering on the vendor list of PTT’s suppliers. PTT has set a strategy to support and manage suppliers, enabling communication of good working direction, guidance, and knowledge with regards to suppliers’ sustainable procurement guideline. This can be achieved through various channels, such as the Supplier Relationship Management (SRM) Seminar and the corporate website.
  • Auditing and assessing suppliers
  • PTT has standards for selecting, assessing and auditing suppliers in a fair and transparent manner and focuses on the supplier’s ability to secure business operations and respond to PTT’s needs. PTT uses a pre-qualification questionnaire (PQ) to evaluate each supplier’s potential in various aspects including service readiness, production rate, transportation, and industrial standards. In addition, sustainability criteria for supplier selection include business integrity, social responsibility, human rights, safety, and environmental management. Qualified suppliers will be included in the PTT Approved Vendor List (AVL). Suppliers must also be able to operate according to the PTT Supplier Sustainable Code of Conduct. Most importantly, PTT has in place supplier assessment and audit programmes to manage risks, define mitigation plans, and evaluate performance based on jointly developed mitigation plans. Assessments take into consideration quality/ quantity/ safety in production and delivery, PTT’s basic requirements, and minimum requirements in labour and environmental laws and management standards such as ISO9001, ISO14001, and ISO45001. In 2020, there was a site audit for 10 high-risk suppliers on economic, social and environmental risks, conducted in tandem with annual spending analysis.
  • Implementing a SSHE management system for suppliers and contractors
  • PTT has developed a SSHE (Safety, Security, Health and Environment) management system for suppliers and contractors alike, serving as a guiding approach for performance control and management. The key components are as follows:
    • The integration of SSHE screening criteria into procurement procedures;
    • The identification and assessment of SSHE-related risks that may arise from contractors, the specification of SSHE responsibilities, approaches for control and operations, and the reporting of contractors’ SSHE performance as required;
    • Development of initiatives to improve contractors’ SSHE performance during turnarounds, provide contractor SSHE performance evaluation system during main practices, SSHE training to contractors whose tasks involve specific risks, and establish SSHE suggestion system for contractors;
    • Communication of SSHE expectations to contractors through various channels in order to cultivate awareness, improve the performance of contractors and build contractor capabilities to respond to PTT needs; and
    • Provision of support to contractors to improve SSHE performance to meet the standards expected by PTT.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-1 New suppliers that were screened using environmental criteria

2) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken

3) Disclosure 414-1 New suppliers that were screened using social criteria

4) Disclosure 414-2 Negative social impacts in the supply chain and actions taken

 

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.

Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:

Disclosure 414-2 Negative social impacts in the supply chain and actions taken corresponds to:

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



FBRH GRI Standards Certified & IEMA recognised Sustainability Course | Venue: London LSE

By registering for the next 2-day FBRH GRI Standards Certified & IEMA recognised course you will be taking the first step in gaining the many benefits of sustainability reporting.

Most importantly, you will gain the knowledge to use the GRI Standards, project manage your own first-class sustainability report and:

  • Identify your most important impacts on the Environment, Economy and Society
  • Begin taking solid, focused, all-round sustainability action ASAP

 

References:

1) This case study is based on published information by PTT, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to PTT: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.